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Lenders relax conditions attached to interest-only deals

WEALTHY borrowers are set to benefit from the introduction of more relaxed criteria on interest-only mortgage deals.

Last week Investec, the specialist bank, introduced an interest-only loan for those with a 25% deposit who earn more than £120,000. It previously required at least a 50% deposit.

The bank has a two-year fix at 3.29% and a three-year fix at 3.49%. There is a £1,249 fee for loans up to £500,000 and £1,745 for those up to £1m.

The deal does not require a strict repayment vehicle, which usually involves making monthly payments into a special savings account or pension. Instead, the borrower has to suggest a realistic repayment strategy — which can include selling their home or a stake in a business.

Lloyds TSB and Halifax, along with Skipton and Nottingham building societies, do offer interest-only deals but none accept house sale as a repayment option. The banks that do, including